Schneider Electric S.E.

H1 revenue was EUR 21.2 billion, a record first half, with 14% organic growth. Q2 revenue was EUR 11.5 billion, up 16.5% organically, and both businesses contributed: Energy Management grew 15.4% in H1 and 18% in Q2, while Industrial Automation grew 7.7% in H1 and 11% in Q2. H1 adjusted EBITA was EUR 4.1 billion, up 22% organically, with adjusted EBITA margin at 19.3%, up 120 bps organically. H1 gross margin was 42.5%, up 10 bps organically. Net income was EUR 2.5 billion, up 30%, and adjusted net income rose 21% (29% at constant currency). Operating cash flow increased 28% year over year to around EUR 3.8 billion, and free cash flow was a record EUR 1.6 billion. For the full year 2026, management raised organic revenue guidance from 7% to 10% up to 10% to 13%, and adjusted EBITA margin expansion guidance from 50 to 80 bps up to 70 to 100 bps. CFO also said FX should be a minus EUR 450 million to minus EUR 500 million revenue headwind if rates hold, with negligible impact on adjusted EBITA margin, and full-year cash conversion is expected to be around 100%.

Olivier Blum emphasized that the company is seeing the benefits of its strategy to connect the physical and digital worlds, with stronger pricing discipline, productivity, and portfolio choices starting to show up in results. He highlighted data center, semiconductors, grid modernization, and industrial recovery as the main demand drivers, while noting that residential remains subdued and the Middle East is still uncertain. His tone was confident and constructive, but he repeatedly stressed that Schneider must stay disciplined, humble, and focused as the environment remains fragmented and hard to predict.

Nathan Fast focused on the financial mechanics behind the stronger half-year performance. He cited H1 gross margin of 42.5% (+10 bps organically), adjusted EBITA of EUR 4.1 billion (+22% organically), a 1.1 point improvement in the SFC-to-sales ratio, and around EUR 535 million of industrial productivity in H1; he also said R&D spending was around EUR 1.2 billion and restructuring charges are expected to total around EUR 450 million this year. On cash, he noted operating cash flow of around EUR 3.8 billion, free cash flow of EUR 1.6 billion, and full-year cash conversion around 100%. He also clarified that tariff refunds contributed around EUR 100 million in Q2 and that if current FX rates hold, the full-year revenue impact should be minus EUR 450 million to minus EUR 500 million with negligible EBITA-margin impact.

Analysts pressed on why gross margin and EBITA margin outperformed expectations and why the implied second-half profile looks less back-end weighted than previously assumed. Management said H1 was broadly in line with the operational plan, but pricing and productivity scaled faster than expected, and Nathan pointed to tariff refunds as an additional factor not assumed back in February. On data centers, management was asked about execution risk and the pace of AI infrastructure demand; Olivier said Schneider uses customer pipeline discussions, backlog, and multi-year visibility to scale capacity, while stressing discipline on customer selection, margin, and supply chain readiness. On Industrial Automation, management said the business is on track toward its 18% margin goal by 2028, but that the turnaround of the legacy IA portfolio will take time.